Three Ways Companies Can Reinvent Themselves Digitally

In less than a decade, the systems that defined the 20th Century -- mass production, mass consumption, mass marketing -- have been swept away by co-creation, co-production, co-distribution.

In an era where anyone can become a brand’s biggest gadfly on Twitter, an activist organizing millions on Facebook, or an ad-hoc taxi service or hotel through Uber and Airbnb, what it means to be in business is being completely overhauled.

Consumers are now the biggest influencers of business strategy, second only to the C-suite itself, according to 55 percent of executives surveyed in our annual C-Suite study. And over the next five years, 63 percent of execs expect consumers to gain even more power and influence over their businesses, according to IBM’s recent Digital Reinvention Study.

The quadruple whammy of social networking, mobility, the cloud, and analytics is creating a new playing field. It used to take years before a new technology would impact a business, but now connectivity and collaboration are turbocharging the pace of change.

Yet, as much tumult as organizations have been through so far, they aren’t prepared for the transformation that’s coming. In part, that’s because these are consumer technologies. And while we’ve adjusted to how they’ve remade our personal lives, their impact is just starting to be felt on our businesses, careers and economies.

Which is why organizations have to learn how to continually reinvent themselves digitally along three main guidelines:

1) Be open: Too many companies are struggling to keep up with social media and big data. In a consumer-led economy, the insights these two technologies provide on everything from changing tastes to emerging business models will be an organization’s single most important competitive advantage. Companies have to embrace customers andsocial analytics. Within their own walls, they need to listen to millennials and other digital natives who understand the power of the new technologies and build processes for getting those insights in front of decision makers. Externally, collaborating with consumers on product and service development is business a usual these days. Real industry leaders are partnering with their customers on strategy development.

2) Reach out: For decades, companies worked to create value systems of supply chains, distribution partners, and marketing campaigns from the ground up. Now ecosystems come and go, often created by forces that a company has no control over. By focusing on single products or transactions, organizations will miss the big picture. Organizations have to develop the skills needed for adapting to new ecosystems as they emerge, identifying new opportunities and anticipating emerging threats.

They will be adept at partnering and establishing new ties, learning how to understand their own strengths and weaknesses and finding the right partners, large or small, who can do things that are not easy to replicate. Organizations should become experts in how to use and monetize the technologies that are underpinning and driving this new world, including cloud computing, social, mobile and analytics as well as application programming interfaces.

3) Don’t just talk, act: Everyone says they understand the importance of embracing social media, mobility, the cloud and analytics. But big changes create new winners and losers within organizations, a reality that traditional hierarchies have a hard time accepting. Some businesses, employees, and even top execs may struggle with the changes required. Appoint digital torchbearers throughout the company and consider appointing a Chief Digital Officer.

Companies need to take the steps necessary to make sure that IT and business units, too often at loggerheads, learn to consistently work closely together. Promoting teamwork through co-location, cross-functional tours of duty, and combined planning exercises are just a few options. And put teams in place and make the organizational changes necessary to make sure that continuous innovation and experimentation, and not simply one-time actions, takes place.

Saul J. Berman, PhD, is Partner and Vice President and Global Leader of the Strategy & Transformation Consulting Group within IBM Global Business Services. He has more than 25 years of consulting experience advising senior management of both large corporate and start-up organizations at IBM, PwC Consulting, The Boston Consulting Group, and as a divisional Vice President with Broadway Department Stores.